I created the Career Spotlight series to share my experience and the experiences of other women in the finance industry. My hope is that by highlighting various career paths in the industry and sharing our experiences, we can demystify these career paths, learn from each other, and expand what we view as options for ourselves.
Today, I’m highlighting what a career in financial due diligence looks like. My friend from graduate school was kind enough to share her experience as a financial due diligence professional at a large accounting and consulting firm. If you’ve never heard of financial due diligence, get ready to learn! And even if you have heard of it, I hope sharing her experience as a woman in the industry will still be enlightening for you.
SO, WHAT IS FINANCIAL DUE DILIGENCE AND HOW DID YOU BECOME INTERESTED IN IT?
Financial due diligence (FDD) is the process of normalizing a company’s financial results over a given period, generally for the purpose of buying or selling the business. We are essentially the bridge between the historical financials and what is presented to the market as a part of the sale process.
I was always interested in how businesses work and the M&A (mergers and acquisitions) process. I came from an economics / finance background, tried out litigation consulting, and decided at the end of the day to go the accounting route.
Quite frankly, I had no idea what FDD was until I went through recruiting prior to starting grad school. The first team I spoke to at that recruiting event is the team I work for now. During our conversation they took the time to understand my background and how it could be applied to the FDD world.
WHAT ARE YOUR KEY RESPONSIBILITIES?
My current key responsibilities fluctuate depending on the deal, but I am generally on the front lines of data management, processing, and analysis; adjustment quantification; and report writing. I make sure we get what we need based on our request list and hone additional questions based on what is provided. I manage the downstream workload of my associate/intern and our overseas shared services professionals. I create the agendas for our meetings with management, with input from the team, and I run some parts of the meetings on my own to gain more leadership experience.
In the future, the role becomes more about leading meetings and calls, communicating with clients, reviewing analysis, and anticipating/quantifying more complex adjustments to the financials. Managers are still pretty in-the-weeds given the small size of our team, but I strive to reduce their involvement in the details so I can further develop my skills and keep costs down as well. Asking for more responsibility, and for help when I get stuck, was my biggest challenge for this fiscal year.
WHAT ARE YOUR FAVORITE PARTS ABOUT YOUR ROLE?
So many things make this job great. Every day and every deal is a new challenge. I sit with and listen to CEOs, CFOs, and other executives speak passionately about their business, which makes the painstaking process of diligence much more enjoyable. I love working on a deal and seeing how you brought value to the deal, whether it is successfully defending our work on a buyer call or being on the other side poking holes in the seller’s model.
Lastly, it sounds so nerdy, but I love crunching numbers and analyzing data. Getting the chance every day to take a deep dive into a Company’s data to solve problems (even though I sometimes spend hours on an analysis and realize it is useless) is rewarding to me. Over the last few years, my group spent a lot of time and resources on developing new analytics tools and creating efficiencies across our processes. Now that many of our basic analyses are automatic, I enjoy using the time to perform more complex analyses and drive more valuable insights.
WHAT ARE YOUR LEAST FAVORITE PARTS ABOUT YOUR ROLE?
THERE IS A LOT ABOUT MY ROLE THAT CAN MAKE ANY DAY TOUGH:
When I first started, it was difficult to get a manager or a senior associate to trust you with work beyond populating data, performing basic analysis, and doing the simplest parts of the report write up. I had no real on-boarding to learn our processes, and when I asked, I was always told “you learn on the job.” It was difficult for me to grasp that I needed to know how to do these tasks in my sleep so that I had the foundation, which then I could explain to our associates and overseas shared services resources. I wanted to feel like I was adding real value right away.
I also hate being micromanaged, so when I finally got more complex work it felt like my managers were breathing down my neck, wanting to know what I was doing each step of the way. If I did not agree with their methodology, too bad, it was their way or the highway. I struggled mentally many days because it did not feel like failing was an option. It had to be right the first time and it had to be done quickly. Sometimes if the manager became frustrated, they would take the work and do it themselves, and would not even tell you they did so. During my second year, I started speaking up more often by telling teammates to stop doing work below their level and pass it down. I tried to stress the importance of teaching and where I felt our current system failed me and how we could do better with the new hires. I will not pretend that things got better overnight and that I am not still pushing my managers and directors to stop doing work that someone else can handle, but there is progress.
Another difficult thing is that although M&A is a high pressure environment, we can sometimes forget we are not saving lives. As with any job, it is exhausting to listen to people complain every day about how busy they are or how their team is not up to par, but make no effort to ask for help or delegate or pose any sort of solution to their problem. It is infuriating because I feel like I cannot complain about being poorly managed, not feeling supported, or about how stressed I am without feeling like I am being judged or viewed as weak.
WHAT ADVICE WOULD YOU GIVE SOMEONE INTERESTED IN FINANCIAL DUE DILIGENCE?
If you are interested in financial due diligence, it is definitely worthwhile to make the time investment to grow your Microsoft Excel competency and learn new data analytics technologies, such as Tableau or Power BI. Taking a Company’s financial data and making it look normal over the specified time period is the crux of what we do, so a good understanding of accounting makes you a lot more dangerous and attractive as a candidate or teammate than someone who does not.
More broadly, the job is also about critical thinking and storytelling. If you are still in school, I would look to take classes related to data analysis and business writing, as well as accounting and finance. When our clients are buying or selling a business, you need to evaluate how this Company fits into the investment thesis, how it looks relative to its market peers, what might make it attractive to a buyer with no experience in this space, etc. This way of thinking doesn’t happen overnight, but reading the financial news and understanding why companies undergo transactions helps you understand the big picture of a deal when it’s easy to get bogged down in the details.
IS THE FINANCIAL DUE DILIGENCE FIELD WELCOMING TO WOMEN?
I think the field of financial due diligence, along with many consulting-type roles, can be very difficult for women. As the world increasingly accepts working women as “normal,” it is still difficult to feel accepted and supported at work and at home (whether you are single, married, a parent, etc.) Many times when I walk into a meeting, I am the only woman in the room. The first deal I ever worked on, someone mistook me for an assistant instead of a diligence professional. As petty as it sounds, I think I will always have a little chip on my shoulder because of that. At the same time, I find when meetings get really intense, people will look at me when answering the questions because somehow I am less of a threat than the men on my team.
I know there are FDD teams out there with lots of well-respected women, but I do not have that personal experience. Do I feel my team understands that we need to put more effort into D&I (diversity and inclusion)? Sure. However, I do not see the individual initiatives to be a better ally or a change agent. Quite frankly, my team still occasionally talks (years later) about a woman that used to work with my team and how awful she was. Maybe she was hard to work with, but at the same time, half of my team can be just as difficult. I remember being so angry one day when a man on my team made a comment about her “not being warm” and it took every ounce of my self-control to not lose it right then and there. I don’t think men around us understand the psychological impact of how they describe their interactions with women (be it clients, opposing diligence teams, their own wives and families) impacts how we think they see us and how they feel about us. I am so tired of the anxiety I feel every day driven by the disconnect between feeling supported as a teammate, but less so as a woman because of these moments.
WHAT DO YOU THINK CAN BE DONE TO INCREASE FEMALE LEADERSHIP IN THE INDUSTRY?
The thing about working M&A in a public accounting firm is that you will generally get promoted if you stick around. To me, this means the barrier to women making it in my profession is not the fear of not getting the promotion. Is the problem that women don’t feel supported enough to manage both their professional and personal lives by both their teams and partners? Is it that they see their male coworkers slaving away at all hours of the day (for whatever reason) and decide that will not work for them? Is it that their team has worked the same way for years and they don’t want to be the one to upend things by asking for what they need?
FOR WOMEN TO ADVANCE IN THE INDUSTRY, THERE ARE THINGS BOTH GENDERS CAN DO.
Women should stop asking and start demanding the things they need. You are likely more valuable to your employer than you think. If you cannot travel to a meeting for whatever reason and need to take it virtually, you should feel supported by your team to handle the situation how you see fit. If you are not, you need to find a new team.
Working remotely during the pandemic proved that we don’t need to travel nearly as much and can operate on more fluid schedules while getting the work done.
Women should stop “following the rules” and start making them work for you. My male boss shows up to work after dropping his kids off at daycare and leaves in the middle of the day to take them home. His hours may be vastly different from what is considered “normal,” but he does not ask for permission, he just does it. Maybe we should do the same.
There are a number of things men can do. Primarily, it is educating themselves. Understand the issues facing the women sitting around you in the workplace today and in the future, and know that it is not their responsibility to educate you. If you read an article or listen to a podcast, find ways to create a dialogue about it. It is okay to ask for recommendations for a place to start.
Secondly, be a good ally. Speak up when you hear people using sexist terms or tones. In conversations with the men on my team, they indicated that the way another man in the office acts in relation to women makes them uncomfortable. Did they say anything to that person? No. Nobody wants to be the one to call another person out, especially if that person ranks above you, but silence is the same as being complicit.
Next, take diversity and inclusion seriously, especially when it comes to the recruiting process. In my experience, the recruiting process for my team is pretty passive. For experienced hires, it can be easy to solely rely on in-bound resumes and connections, and these candidates typically turn out to be (straight, white) men. If a company’s D&I efforts are more than just lip service, it needs to have recruiters (either internal, external, or both) who are out there looking for diverse candidates, even if they are not actively in the market. This level of effort, whether it is successful or not, can go a long way in creating a more inclusive environment that will help retain women.
Lastly, if you have the ability, be a sponsor. Many firms have sponsorship opportunities at the senior manager (i.e. pre-leadership) level. This pre-leadership level sponsorship is very important, but it feels reactive and mainly about maintaining women in leadership. Sponsorship needs to start earlier than that. Companies should be identifying individuals for sponsorship opportunities far earlier in their careers.
Recent research shows that the time when most women get left behind is the manager-level promotion, the “broken rung” so-to-speak. As appreciative of my own mentors as I am, on the whole, women are over-mentored. We are bombarded with (well-meaning) advice, groups, webcasts, and conferences, but what we really need is someone to say “I’m taking you with me” as we climb higher.
I hope you enjoyed this brutally honest view into what a career in financial due diligence is like. I have also spent time in financial due diligence and can attest to its difficulties, but there were also parts of the job I really enjoyed!